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JUN 24 2014

Govt keen to raise private role in power distribution

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 24th JUN 2014

Piyush Goyal, minister for power, coal and renewable energy, said on Monday the government was keen to increase the private sector's participation in electricity distribution, ensure last-mile funding and low cost of borrowings for projects.

Last-mile funding is for developers who have exhausted other funding options as a project reaches its close.

Goyal was talking to reporters after a three-hour meeting with representatives of financial institutions.

The banking sector has expressed concerns over a lack of economic viability of assets in the generation space and the mounting losses for state distribution companies.

The meeting was attended by ICICI Bank Managing Director Chanda Kochhar; State Bank of India Chairperson Arundhati Bhattacharya; Axis Bank Chief Executive and Managing Director (MD) Shikha Sharma; and Punjab National Bank Chairman and MD K R Kamath, among others.

Power distribution is largely dominated by state-owned distribution companies. The private sector supplies power in Delhi, Mumbai and parts of Gujarat, Odisha, West Bengal and Uttar Pradesh. Due to stagnant rates, India's 36 distribution utilities had losses of Rs 2.4 lakh crore as on March 2012. Generation projects of 39,000 megawatts (Mw), with an investment of Rs 1.5 lakh crore, including a debt of Rs 1.1 lakh crore, are facing viability concerns due to fuel-supply issues and delayed environmental clearances.

Goyal said, "This crisis is an opportunity. But restructuring of bad loans for distribution companies is not essential.

"My immediate priority is to ensure adequate funding for distribution companies and improving the overall health of the sector."

The banks have been asked to work on a three-year road map addressing funding concerns, he said. The power ministry wants a review of a proposal to impose anti-dumping duty on imports of solar power equipment because of a lack of adequate local manufacturing capacity. "We have asked the commerce and finance ministries to review the proposal."

Last month, the commerce ministry had recommended an anti-dumping duty on solar power cells from the US, Malaysia, China and Taiwan. Monday's meeting was attended by Power Finance Corporation Chairman M K Goel; Power Grid Chairman R N Nayak; and NTPC Chairman Arup Roy Choudhury. The meeting follows a similar four-hour interaction of ministry officials with the heads of private generation companies last week.


Last-mile funding, low cost of borrowings for projects

Restructuring of bad loans for distribution companies, not essential


Delhi Uttar Pradesh Punjab Gujarat Odisha West Bengal Power Grid Finance Grid China NTPC Ltd Arup Roy Choudhury Bank of India United States Mumbai Power India solar power

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